Things You Can Do If the Slowdown Slowed You Down
The talk and questions around here of late have been about the housing slowdown and what it might be doing to my business.
“Are you slow?” “Has the housing slowdown affected your remodeling business?” friends and acquaintances have asked.
Well, even if you are a remodeler exclusively, it would be foolish to ignore the housing market and the potential effect it might have or be having on your business.
Here in Southern Arizona, housing starts were down at the end of 2007 by about 50% from their peak in 2005. For 2008, housing starts are expected to be flat or just slightly higher than the year before. So what does that mean for remodeling?
Last year at Dakota Builders, we wrapped up with about a 5% drop in business. I’m not sure if that’s attributable to the housing market slowdown, but the change is so slight, it’s not worth me spending the time to diagnose it.
But there are a few generalizations worth noting for the year ahead.
Similar to the government’s durable goods forecasting, when people don’t buy new houses, they don't buy other “new” purchases like new patios, new den conversions or redecorating either.
Also, if no one is buying a new house, then some existing homes aren’t being sold, right?
Now, given that a significant amount of remodeling is done just before and after the sale of a home, what might that mean for your business for the coming year?
Here is something else to consider. When home owners start to question their equity situation and property values, they tend to pull back from major purchases.
The home addition that seemed to make economic sense last year now becomes questionable in their minds. The equity home owners were going to use for the new master suite may have just tightened a bit and so forth.
But, while this won’t be a year to break remodeling records, it also doesn’t have to be time to retreat and hibernate. There will always be prospective customers with needs independent of economic conditions ― maintenance and repair items that can’t wait, or long-term goals that outlive a one- or two-year cycle.
Here are a few things you can do to maintain a reasonable amount of work.
- First, take a good, hard look at your company’s "best" project or "sweet spot."
For example, if your best projects have historically been whole-house remodels or additions of more than $200,000, it might be time to consider whether you can profitably tackle baths, kitchen, porches, decks or other smaller-scale projects.
You’ll have to consider labor, in-house capabilities, your market audience and more to make this assessment.
- You also might want to begin contacting some of your old customers and remind them that you do small jobs, too.
If they only remember you as the firm that added 1,000 square feet to their home, they might not think of you for the bathroom facelift or new deck they’ve been considering.
- And speaking of contacting people, that’s where NAHB Remodelers can help.
Where else can you find a group of like-minded professionals who have been through it before and have successful coping strategies to share? NAHB Remodelers has a deep network of remodelers, vendors, suppliers and trades to give advice and serve as a referral source.
As association members, we all realize that we’re in this together, and only by keeping strong and profitable can our association thrive. So it’s in all our best interests to help out our fellow members.
The online resources, business tools, marketing and management tips, employee and company policy advice alone are worth multiple times your membership fees, and it’s all there for the asking.
Take advantage of your local membership opportunities. Make every meeting an occasion to chase leads, build relationships and renew or strengthen old ones.
Greg Miedema, CGR, CAPS, is president of Dakota Builders in Tucson, Ariz. He is the founder of his local Remodelors™ Council, a member of the NAHB Remodelors™ Council Board of Trustees and served as the chairman of the Southern Arizona Home Builders Association (SAHBA), the first remodeler to chair the association. The SAHBA also named Dakota Builders, Inc. the Remodelor™ of the Year in 1998, 1999, 2000 and 2003. For more information, e-mail Miedema, or visit the Dakota Builders Web site at www.dakotabuildersinc.com.
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